Exhibit 10.5


 


CONSULTING
AGREEMENT


 


THIS CONSULTING AGREEMENT
(“Agreement”) is entered into by and between AGA Medical Corporation, a
Minnesota corporation, with its principal office located at 5050 Nathan Lane
North, Plymouth, MN 55442 (“Company”), and Franck L. Gougeon, residing at 4729 Annaway
Drive, Edina, Minnesota 55436 (“Consultant”), effective as of this 20th
day of June, 2008 (“Effective Date”).


 


WHEREAS,
the Company desires to retain Consultant to provide certain services for the
Company, and Consultant desires to perform such services pursuant to the terms
and conditions set for the herein.


 


NOW,
THEREFORE, in consideration of their respective promises and covenants, the
parties hereby agree as follows:


 


1.                                       Services.  Subject to the terms and conditions set forth
in this Agreement, the Company agrees to engage Consultant as Director and
Co-Founder, and Consultant agrees as reasonably requested by the Company to
represent the Company with health care professionals and at medical industry
conferences, to advise the Company’s Chief Executive Officer, along with such
other services as the Company may, from time to time, reasonably request (“Services”).  Services shall also include the obligations
set forth in Paragraph 3(d) herein. 
In addition, and without further compensation, Consultant shall provide
Services as requested for the Company’s parent, AGA Medical Holdings, Inc.
(“Holdings”) and/or one or more of the Company’s Subsidiaries.


 


2.                                       Term.                  The term of this
Agreement (“Term”) shall be the earliest of: (i) five (5) years
from the Effective Date; (ii) the date upon which the collective
beneficial ownership of Consultant and the Gougeon Stockholders (as defined in
that certain Amended and Restated Stockholders Agreement, dated April 21,
2008, as may be further amended from time to time (“Stockholders Agreement”),
by and among Holdings, Consultant and the other individuals and parties thereto)
is less than ten percent (10%) of all of the issued and outstanding shares of
the aggregated and fully diluted shares of all classes of stock of Holdings;
and (iii) as otherwise provided for herein.


 


3.                                       Performance
and Compensation.


 


(a)                          Hours.  Consultant shall perform Services as reasonably
requested from time to time by the Company up to a maximum of thirty (30) days
per 12-month period of the Term commencing on the Effective Date.  Consultant may provide additional Services in
excess of thirty (30) days during any successive 12-month period of the Term as
may be agreed between Consultant and the Company.


 


(b)                         Compensation.  The Company shall pay Consultant a retainer
in the amount of One Hundred Seventy Thousand and No/100 Dollars ($170,000.00)
for Services for 


 

















 


each 12-month period of
the Term commencing on the Effective Date, which retainer shall be paid in
equal monthly installments.  In the event
Consultant performs Services at the request of the Company in excess of thirty
(30) days during any successive 12-month period of the term, the Company shall
pay Consultant an hourly rate of Four Hundred and No/100 Dollars ($400.00) for such
Services.  Consultant shall record time
spent performing Services and shall provide documentation to the Company in
such form and time intervals as may be requested by the Company to evidence
hours worked.


 


(c)                          Business
Expenses and Company Support.  The
Company shall pay or reimburse Consultant for all reasonable and necessary
business expenses incurred or paid by Consultant in the performance of the
Services, subject to any maximum annual limit or other restrictions on such expenses
set by the Company and to such reasonable substantiation and documentation as
may be specified by the Company from time to time in its standard policies
related to reimbursement of business expenses. 
The Company shall provide a guest office, secretarial support and
continued Company e-mail and cell phone service for the Consultant during the
Term.


 


(d)                         Continuing
Cooperation.  As a part of the
Services, upon request by the Company and for the Term, Consultant agrees to
cooperate with and to provide such information, documents, data and testimony
as may be reasonably requested by the Company arising out of or relating to the
Company’s business and/or any actual or potential claim asserted for or against
the Company or any of the Company’s parents, subsidiaries or affiliated
entities.


 


4.                                       Termination.  Subject to survival of obligations set forth
herein, this Agreement shall terminate under the following circumstances (the
date of each event of termination set forth below, by whatever cause, is
referred to as the “Termination Date”):


 


(a)                          Automatic
Termination.  This Agreement shall immediately
and automatically terminate upon the death of the Consultant or upon the
occurrence of the conditions subsequent set forth in Section 2(i) or
2(ii) hereof.


 


(b)                         By the
Company for Cause.  The Company may
terminate this Agreement for Cause discovered or arising after the Effective
Date at any time upon notice to Consultant setting forth the nature of such
Cause.  The following shall constitute “Cause”
for termination: (i) Consultant’s conviction of or plea of nolo contendere to a felony or other crime involving moral
turpitude; (ii) Consultant’s substantiated fraud, theft or embezzlement
committed with respect to the Company, Holdings or the Company’s Subsidiaries; (iii) breach
by Consultant of any of the provisions of Sections 5, 6 and/or 7 hereof, or the
similar provisions of any other agreement between the Consultant and the
Company, that causes material harm to the Company, Holdings or any of the
Company’s Subsidiaries; (iv) Consultant’s willful and continued failure to
perform the Services to the Company, Holdings or any of its Subsidiaries; or (v) Consultant’s
willful failure to comply with or follow the directions or orders of the Company;
provided, however, that the Company may terminate this Agreement
for Cause within the meaning of these clauses (iv) or (v) only after
the Company has provided written notice to Consultant of 


 


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the failure and Consultant
shall have not have remedied such failure within thirty (30) business days
following the effectiveness of such notice.


 


(c)                          By
Consultant Upon Notice.  Consultant
may terminate this Agreement upon thirty (30) days’ prior written notice to the
Company.


 


5.                                       Restricted
Activities.  The Consultant agrees
that some restrictions on Consultant’s activities during and after the Term of
this Agreement are necessary to protect the goodwill, Confidential Information
and other legitimate interests of the Company and its Subsidiaries:


 


(a)                          During
the Term of this Agreement and for eighteen (18) months after the Termination
Date (in the aggregate, the “Non-Competition Period”), Consultant shall not,
directly or indirectly, whether as owner, partner, investor, consultant, agent,
employee, independent contractor, co-venturer or otherwise (other than through
ownership of  publicly-traded capital
stock of a corporation which represents less than one percent (1%) of the
outstanding capital stock of such corporation), (i) compete with the
Company, Holdings or any of the Company’s Subsidiaries in any business related
to developing, selling, licensing or otherwise providing Products and related
services to physicians, hospitals or other medical establishments in the United
States or such other business activities which the Company, Holdings or any of
the Company’s Subsidiaries shall conduct or intend to conduct as of the
Termination Date, or (ii) undertake any planning for any business
competitive with the Company, Holdings or any of the Company’s Subsidiaries.  Specifically, but without limiting the
foregoing, Consultant agrees not to engage in any manner in any activity that
is directly or indirectly competitive or potentially competitive with the
business of the Company, Holdings or any of the Company’s Subsidiaries as
conducted or under consideration at any time during the Term of this Agreement
or performance of the Services for the Company or any of its Subsidiaries
(including prior to the date hereof).


 


(b)                         During
the Term, Consultant will not undertake any outside activity that could
reasonably give rise to a conflict of interest or otherwise interfere with
Consultant’s duties and obligations hereunder.


 


(c)                          Consultant
further agrees that during the Term of this Agreement and during the
Non-Competition Period, Consultant will not, directly or indirectly, (i) hire
or attempt to hire any employee of the Company, Holdings or any of the Company’s
Subsidiaries or anyone who was such an employee within the six (6) months
preceding such hire or attempt to hire, (ii) hire or attempt to hire any
independent contractor providing services to the Company, Holdings or any of
the Company’s Subsidiaries or anyone who was such an independent contractor
within six (6) months preceding such hire or attempt to hire, (iii) assist
in hiring or any attempt to hire of anyone identified in clauses (i) or (ii) of
this sentence by any other Person, (iv) encourage any Consultant or
independent contractor of the Company, Holdings or any of the Company’s Subsidiaries
to terminate his or her relationship with the Company, Holdings or any of the
Company’s Subsidiaries, or (v) solicit or encourage any customer or vendor
of the Company, Holdings or any of the Company’s Subsidiaries to terminate or
diminish its relationship 


 


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with any of them, or, in
the case of a customer, to conduct with any Person any business or activity
which such customer conducts or could conduct with the Company, Holdings or any
of the Company’s Subsidiaries.


 


6.                                       Confidential
Information.


 


(a)                          Consultant
acknowledges that the Company, Holdings or any of the Company’s Subsidiaries
continually develop Confidential Information, that Consultant has in the past
and may in the future develop Confidential Information for the Company,
Holdings or any of the Company’s Subsidiaries and that Consultant has in the
past and may in the future learn of Confidential Information during the course
of this Agreement or in the performance of the Services.   Consultant will comply with the policies and
procedures of the Company and its Subsidiaries for protecting Confidential
Information and shall never use or disclose to any Person (except as required
by applicable law or for the proper performance of his duties and responsibilities
to the Company and its Subsidiaries), any Confidential Information obtained by Consultant
incident to this Agreement, or in the performance of the Services or other
association with the Company, Holdings or any of the Company’s Subsidiaries.  Consultant understands that this restriction
shall continue to apply after this Agreement terminates, regardless of the
reason for such termination.


 


(b)                         All
documents, records, tapes and other media of every kind and description
relating to the business, present or otherwise, of the Company, Holdings or any
of the Company’s Subsidiaries and any copies, in whole or in part, thereof (the
“Documents”), whether or not prepared by Consultant, shall be the sole
and exclusive property of the Company, Holdings and the Company’s
Subsidiaries.  Consultant shall safeguard
all Documents and shall surrender to the Company at the time this Agreement
terminates, or at such earlier time or times as the Board or its designee may
specify, all Documents then in Consultant’s possession or control.


 


7.                                       Assignment
of Rights to Intellectual Property.  Consultant
shall promptly and fully disclose all Intellectual Property to the Company, and
Consultant hereby acknowledges that all such Intellectual Property is the
property of the Company.  Consultant
hereby assigns and agrees to assign to the Company (or as otherwise directed by
the Company) Consultant’s full right, title and interest in and to all
Intellectual Property.  Consultant agrees
to execute any and all applications for domestic and foreign patents,
copyrights or other proprietary rights and to do such other acts (including
without limitation the execution and delivery of instruments of further
assurance or confirmation) requested by the Company to assign the Intellectual
Property to the Company and to permit the Company to enforce any patents,
copyrights or other proprietary rights to the Intellectual Property.  Consultant will not charge the Company for
time spent in complying with these obligations. 
All copyrightable works that Consultant creates shall be considered “work
made for hire”.  Notwithstanding the
foregoing, this Section 7 shall not apply to any Intellectual Property
which no equipment, supplies, facility or trade secret information of the
Company, Holdings or any of the Company’s Subsidiaries was used and which was
developed entirely on Consultant’s own time, and (i) which does not relate
(A) directly to the business of the Company, Holdings or any of the
Company’s 


 


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Subsidiaries or (B) such
entities’ actual or demonstrably anticipated research development, or (ii) which
does not result from any work performed by the Consultant for the Company,
Holdings or any the Company’s Subsidiaries.


 


8.                                       Enforcement
of Covenants.  Consultant
acknowledges that Consultant has carefully read and considered all the terms
and conditions of this Agreement, including the restraints imposed upon Consultant
pursuant to Sections 5, 6 and/or 7 hereof. 
Consultant agrees that said restraints are necessary for the reasonable
and proper protection of the Company, Holdings and the Company’s Subsidiaries
and that each and every one of the restraints is reasonable in respect to
subject matter, length of time and geographic area.  Consultant further acknowledges that, were Consultant
to breach any of the covenants contained in Sections 7, 8 and/or 9 hereof, the
damage to the Company would be irreparable. 
Consultant therefore agrees that the Company, in addition to any other
remedies available to it, shall be entitled to preliminary and permanent
injunctive relief against any breach or threatened breach by Consultant of any
of said covenants.  The parties further
agree that, in the event that any provision of Sections 5, 6 and/or 7  hereof shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area or too great a range of activities, such
provision shall be deemed to be modified to permit its enforcement to the
maximum extent permitted by law.


 


9.                                       Status
as an Independent Contractor. 
Consultant is and shall remain an independent contractor of the Company
and is not and shall not be deemed to be an employee, partner or joint venturer
with the Company. Consultant shall be entirely and solely responsible for
Consultant’s acts and the acts of his agents, employees and subcontractors, if
any, while engaged in the performance of the Services. Consultant acknowledges
that the Company shall not be responsible for deducting withholding taxes,
payroll taxes, social security taxes or other similar items from compensation
paid to Consultant. Consultant shall be solely responsible for any and all such
taxes, payments, deductions, or contributions. 
As an independent contractor, Consultant shall not be entitled to
participate in or receive benefits under any insurance, benefit or bonus plans
offered by the Company to its employees. Consultant agrees to indemnify the
Company and hold the Company harmless from any and all claims or penalties
asserted against the Company for any failure by Consultant to pay taxes due on
any form of compensation provided by the Company pursuant to this Agreement.


 


10.                                 Definitions.  Words or phrases which are initially
capitalized or are within quotation marks shall have the meanings provided in
this Section 12 and as provided elsewhere herein.  For purposes of this Agreement, the following
definitions apply:


 


(a)                          “Affiliate”
means, with respect to the Company or any other specified Person, any other
Person directly or indirectly controlling, controlled by or under common
control with the Company or such other specified Person, where control may be
by management authority, equity interest or other means.


 


(b)                         “Confidential
Information” means any and all information of the Company, Holdings and the
Company’s Subsidiaries that is not generally known by others with 


 


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whom they compete or do
business, or with whom they plan to compete or do business and any and all
information which, if disclosed by the Company, Holdings or the Company’s
Subsidiaries, would assist in competition against them.  Confidential Information includes without
limitation such information relating to (i) the development, research,
testing, manufacturing, marketing and financial activities of the Company,
Holdings or the Company’s Subsidiaries, (ii) the Products, (iii) the
costs, sources of supply, financial performance and strategic plans of the
Company, Holdings or the Company’s Subsidiaries, (iv) the identity and
special needs of the customers of the Company, Holdings or the Company’s Subsidiaries
and (v) the people and organizations with whom the Company, Holdings or the
Company’s Subsidiaries have business relationships and those
relationships.  Confidential Information
also includes any information that the Company, Holdings or any of the Company’s
Subsidiaries have received, or may receive hereafter, from others which was
received by the Company, Holdings or any of the Company’s Subsidiaries with any
understanding, express or implied, that the information would not be disclosed.


 


(c)                          “Intellectual
Property” means inventions, discoveries, developments, methods, processes,
compositions, works, concepts and ideas (whether or not patentable or
copyrightable or constituting trade secrets) conceived, made, created, developed
or reduced to practice by Consultant (whether alone or with others and whether
or not during normal business hours or on or off the premises of the Company,
Holdings or any of the Company’s Subsidiaries) during the Term of this
Agreement (including prior to the Effective Date) that relate to either the
Products or any prospective activity known to Consultant of the Company,
Holdings or any of the Company’s Subsidiaries or that make use of  Confidential Information or any of the
equipment or facilities of the Company, Holdings or any of the Company’s
Subsidiaries.


 


(d)                         “Person”
means an individual, a corporation, a limited liability company, an association,
a partnership, an estate, a trust and any other entity or organization,
including an Affiliate or a Subsidiary.


 


(e)                          “Products”
mean all products planned, researched, developed, tested, manufactured, sold,
licensed, leased or otherwise distributed or put into use by the Company or any
of its Subsidiaries, together with all services provided or planned to be
provided by the Company or any of its Subsidiaries, during the Term of this
Agreement or during the term of his prior employment by the Company (including
prior to the Effective Date).


 


(f)                            “Subsidiary”
shall mean any Person of which the Company (or other specified Person) shall,
directly or indirectly, own beneficially or control the voting of at least a
majority of the outstanding capital stock (or other shares of beneficial
interest) entitled to vote generally or at least a majority of the partnership,
membership, joint venture or similar interests, or in which the Company (or
other specified Person) or a Subsidiary thereof shall be a general partner or
joint venturer without limited liability.


 


11.                                 Survival.  The provisions of this Agreement shall
survive following the Termination Date if so provided herein or desirable to
accomplish the purposes of other 


 


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surviving provisions,
including without limitation the provisions of Section 5, 6, 7 and 8
hereof.


 


12.                                 Assignment.  Neither the Company nor Consultant may make
any assignment of this Agreement or any interest herein, by operation of law or
otherwise, without the prior written consent of the other; provided, however,
that the Company may assign its rights and obligations under this Agreement
without the consent of Consultant in the event that the Company shall hereafter
effect a reorganization, consolidation or merger or to whom the Company
transfers all or substantially all of its properties or assets.  This Agreement shall inure to the benefit of
and be binding upon the Company and Consultant, their respective successors,
executors, administrators, heirs and permitted assigns.


 


13.                                 Severability.  If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of
competent jurisdiction, then the remainder of this Agreement, or the
application of such portion or provision in circumstances other than those as
to which it is so declared illegal or unenforceable, shall not be affected
thereby, and each portion and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.


 


14.                                 Waiver.  No waiver of any provision hereof shall be
effective unless made in writing and signed by the waiving party.  The failure of either party to require the
performance of any term or obligation of this Agreement, or the waiver by
either party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.


 


15.                                 Notices.  Any and all notices, requests, demands and
other communications provided for by this Agreement shall be in writing and
shall be effective when delivered in person, when delivered by courier at Consultant’s
last known address on the books of the Company, or five (5) business days
following deposit in the United States mail, postage prepaid, registered or
certified, and addressed to Consultant at his last known address on the books
of the Company or, in the case of the Company, at its principal place of
business, attention of the Chairman of the Board, or to such other address as
either party may specify by notice to the other actually received.


 


16.                                 Entire
Agreement.  This Agreement and the
other plans and documents specifically referred to herein constitute the entire
agreement between the parties regarding the subject matter of this Agreement
and such other plans and documents and supersede all prior communications,
agreements and understandings, written or oral, with respect to such subject
matter, including any prior agreements between Consultant and the Company.


 


17.                                 Amendment.  Subject to the terms of the Stockholders
Agreement, this Agreement may be amended or modified only by a written
instrument signed by Consultant and by an expressly authorized representative
of the Company.


 


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18.                                 Headings.  The headings and captions in this Agreement
are for convenience only and in no way define or describe the scope or content
of any provision of this Agreement.


 


19.                                 Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be an original and all of which together
shall constitute one and the same instrument.


 


20.                                 Governing
Law.  This contract and shall be
construed and enforced under and be governed in all respects by the laws of
Minnesota, without regard to the conflict of laws principles thereof.


 


IN
WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the
Company, by its duly authorized representative, and by Consultant, as of the
date first above written.


 


 


	
  THE CONSULTANT:

  	
   

  	
  AGA MEDICAL CORPORATION:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Franck L. Gougeon

  	
   

  	
  By: 

  	
  /s/ Ronald E. Lund

  
	
  Franck L. Gougeon

  	
   

  	
   

  	
      
  Ronald Lund

  
	
   

  	
   

  	
  Its: 

  	
  General Counsel and
  Secretary

  
	
   

  	
   

  	
   

  



 


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